Pursuant to Articles 31.2 and 31.

4 of the United States-Mexico-Canada Agreement

(USMCA), the United States requests consultations with Mexico with regard to various measures
of Mexico that favor its state-owned electrical utility, Comisión Federal de Electricidad (CFE),
and petroleum company, Petróleos Mexicanos (Pemex), and negatively impact U.S. companies
operating in Mexico and U.S.-produced energy. These measures appear to breach Mexico’s
commitments under the USMCA.

I. The Electric Power Industry Law, As Amended

1. In March 2021 Mexico amended its Electric Power Industry Law to require its grid
operator Centro Nacional de Control de Energía (CENACE) to prioritize in various ways
electricity produced by CFE over private competitors in dispatching electricity into Mexico’s
grid. This prioritization is accomplished through a number of provisions, operating separately or
in conjunction, including: (1) Article 26, which requires that CENACE prioritize dispatch of
power generated by plants “owned by State agencies, entities, or enterprises”; (2) Article 4(VI),
which “guarantee[s], in the first instance” electricity contracts of a type that only CFE can hold
or enter into; and (3) Articles 101 and 108(V), which call on CENACE to “determine the
allocation and dispatch” of electricity based on broad, undefined criteria. The Electric Power
Industry Law, as amended, is reflected in legal instruments that include the following, operating
separately or collectively:

(a) The Electric Power Industry Law; 1

(b) Draft decree initiative by which several provisions of the Electric Power Industry
Law are reformed and others are appended; 2

(c) Decree amending and adding various provisions of the Electric Power Industry
Law (March 9, 2021) 3 and any implementing regulations;

(d) Decision of the Mexican Supreme Court announced April 7, 2022 in

Unconstitutionality Action 64/2021 and all votes. 4

1
Ley de la Industria Eléctrica, Nueva Ley publicada en el Diario Oficial de la Federación el 11 de agosto de 2014,
Última reforma publicada DOF 11-05-2022 , https://www.diputados.gob.mx/LeyesBiblio/pdf/LIElec.pdf.
2
Presidenta de la Mesa Directiva del Congreso General de los Estados Unidos Mexicanos, Iniciativa con proyecto
de decreto por el que se reforman y adicionan diversas disposiciones de la Ley de la Industria Eléctrica,
http://archivos.diputados.gob.mx/portalHCD/archivo/INICIATIVA_PREFERENTE_01FEB21.pdf
3
Diario Oficial de la Federación, DECRETO por el que se reforman y adicionan diversas disposiciones de la Ley de
la Industria Eléctrica (Mar. 9, 2021),
https://www.dof.gob.mx/nota_detalle.php?codigo=5613245&fecha=09%2F03%2F2021.
4
See Suprema Corte de Justicia de la Nación, Sentencia, Acción de inconstitucionalidad 64/2021& Votos
concurrentes y particulares que formula la Ministra Ana Margarita Ríos Farjat, Voto parcialmente disidente que
formula la Minstra Loretta Ortiz Ahlf, Voto particular y concurrente que formula el Minstro Juan Luis González
Alcántara Carraancá, Voto particular que formula la Señora Ministra Norma Lucía Piña Hernández, Voto
Concurrente que formula la Señora Ministra Yasmín Esquivel Mossa, Voto concurrente que formula el Minisro
Presidente Arturo Zaldívar Lelo de Larrea, Voto concurrente que formula el Señor Ministro Alberto Pérez Dayá,
Voto Particular y concurrente que formula el Ministro Alfredo Gutiérrez Ortiz Mena, Voto particular que formula
el Señor Ministro Jorge Mario Pardo Rebolledo, Voto particular y concurrente que formula el Ministro Javier
Laynez Potisek, Voto particular que formula el Señor Ministro Luis María Aguilar Morales,
https://www2.scjn.gob.mx/ConsultaTematica/PaginasPub/DetallePub.aspx?AsuntoID=281693; Índice, Contendido

1
2. This measure appears to be inconsistent with several provisions of the USMCA. First,
the measure appears to be inconsistent with Article 2.3 of the USMCA because Mexico has
failed to accord national treatment to U.S. goods in accordance with Article III of the General
Agreement on Tariffs and Trade 1994 (GATT 1994). Second, the measure appears to be
inconsistent with Article 14.4 of the USMCA because Mexico has failed to accord to U.S.
investors and their investments treatment that is no less favorable than that it accords, in like
circumstances, to Mexican investors and their investments. 5

II. Inaction, Delays, Denials, and Revocations of Private Companies’ Abilities to

Operate in Mexico’s Energy Sector
3. Mexico is engaging, or has engaged, in action or inaction which hinders the ability of
private companies to operate in Mexico’s energy sector. These measures include: delaying,
denying or failing to act on applications for new permits or permit modifications; suspending or
revoking existing permits; or otherwise blocking private companies’ ability to:

(a) Operate renewable energy facilities, such as wind and solar installations;

(b) Import and export electricity and fuel;

(c) Store or transload fuel; and

(d) Build or operate retail fuel stations.

4. Each of these measures appear to be inconsistent with several provisions of the USMCA.

5. First, they appear to be inconsistent with Article 2.3 of the USMCA because they provide
treatment less favorable than that accorded to like products of national origin in respect of all
laws, regulations and requirements affecting their internal sale, offering for sale, purchase,
transportation, distribution or use.

6. Second, they appear to be inconsistent with Article 14.4 of the USMCA because Mexico
is failing to accord to U.S. investors and their investments treatment that is no less favorable than
that it accords, in like circumstances, to Mexican investors and their investments.

de la versión taquigráfica de la sesión pública ordinaria del pleno de la suprema Corte de Justicia de la Nación,
Celebrada el Jueves 7 de Abril de 2022, https://www.scjn.gob.mx/sites/default/files/versiones-
taquigraficas/documento/2022-05-09/7%20de%20abril%20de%202022%20-
%20Versi%C3%B3n%20Definitiva3.pdf; Suprema Corte de Justicia de la Nación, Comunicados de Prensa No.
125/2022 (Apr. 7, 2022), Tribunal Pleno de la SCJN concluye discusión de acción de inconstitucionalidad promoida
en contra de reforma a la Le de la Industria Eléctrica,
https://www.internet2.scjn.gob.mx/red2/comunicados/noticia.asp?id=6845
5
Pursuant to Article 32.11 of the USMCA, with respect to obligations in Chapter 14 (Investment) and Chapter 22
(State-Owned Enterprises and Designated Monopolies), Mexico may not adopt or maintain a measure not consistent
with the least restrictive measures that Mexico may adopt or maintain under another covered trade or investment
agreement.

2
7. Third, they appear to be inconsistent with Article 2.11 of the USMCA because, and to the
extent, they prohibit or restrict imports or exports of a good.

8. Fourth, they appear to be inconsistent with Article 22.5.2 of the USMCA because the
relevant administrative body is not exercising its regulatory discretion in an impartial manner
with respect to enterprises that it regulates, including enterprises that are not state-owned
enterprises.

9. Fifth, they appear to be inconsistent with Article 29.3 of the USMCA because Mexico is
not administering its laws in a consistent, impartial, and reasonable manner.

III. Postponement of Requirement to Supply Ultra-Low Sulfur Diesel for Pemex

Only

10. In December 2019, Mexico’s Energy Regulatory Commission (Comisión Reguladora de

Energía, or CRE) issued a regulation granting only Pemex a five-year extension to comply with
maximum sulfur content requirements under its applicable automotive diesel fuel standard,
which as of December 2018 required ultra-low sulfur diesel to be sold throughout Mexico. This
measure is reflected in legal instruments that include the following, operating separately or
collectively:

(a) Energy Regulatory Commission, Resolution of the Energy Regulatory

Commission that grants Pemex Industrial Transformation an extension to the term
for compliance with the specification of sulfur content in automotive diesel,
provided for in the official Mexican standard NOM-016-CRE-2016, quality
specifications for petroleum products, Resolution No. RES/1817/2019 (Dec. 18,
2019); 6

(b) AGREEMENT whereby the Energy Regulatory Commission issues the Mexican
Official Standard NOM-016-CRE-2016, Quality Specifications for Petroleum
Products (Aug. 29, 2016); 7

(c) AGREEMENT of the Energy Regulatory Commission that modifies the Official
Mexican Standard NOM-016-CRE-2016, Specifications for the quality of

6
Comisión Reguladora de Energía, Resolución de la Comisión Reguladora de Energía que otorga a Pemex
Transformación Industrial una ampliación al plazo para el cumplimiento de la especificación de contenido de azufre
en el diésel automotriz, previsto en la norma oficial Mexicana NOM-016-CRE-2016, especificaciones de calidad de
los petrolíferos, Resolución Num. RES/1817/2019 (Dec. 18, 2019),
https://drive.cre.gob.mx/Drive/ObtenerResolucion/?id=YzQ0YmNmYmMtMzEyYS00ZDI5LTE5NjYzLTg5NTZm
NjFlOTg4YQ==.
7
Diario Oficial de la Federación, ACUERDO por el que la Comisión Reguladora de Energía expide la Norma
Oficial Mexicana NOM-016-CRE-2016, Especificaciones de calidad de los petrolíferos (Aug. 29, 2016),
http://www.dof.gob.mx/nota_detalle.php?codigo=5450011&fecha=29/08/2016#gsc.tab=0.

3
 petroleum products, based on article 51 of the Federal Law on Metrology and
Standardization (June 26, 2017). 8
11. Mexico’s measure appears to be inconsistent with several provisions of the USMCA.
First, the measure appears to be inconsistent with Article 2.3 of the USMCA because Mexico has
failed to accord national treatment to U.S. goods in accordance with Article III of the GATT
1994. Second, the measure appears to be inconsistent with Article 22.5.2 of the USMCA
because, by granting state-owned enterprise Pemex such an extension, CRE has not exercised its
regulatory discretion in an impartial manner with respect to enterprises that it regulates,
including enterprises that are not state-owned enterprises.

IV. Actions Regarding the Use of Mexico’s Natural Gas Transportation Service

12. In June 2022, Mexico’s Secretary of Energy sent an official letter to the heads of
Mexico’s Energy Regulatory Commission (CRE) and National Natural Gas Control Center
(Centro Nacional de Control del Gas Natural, or CENAGAS) announcing an energy policy and
“supply guarantee strategy” that would incentivize or require current or future users of Mexico’s
natural gas transportation service to source natural gas from CFE or Pemex and would impose
restrictions on the importation of U.S. natural gas. This letter includes statements that (1)
“require” CENAGAS to “demand” that users or those interested in using Mexico’s natural gas
transportation service prove “that they receive the supply of Natural Gas from any of the
productive companies of the State or its subsidiaries or affiliates”, (2) “require” CENAGAS to
“demand” that “[a]t those points where CFE, its productive companies, or subsidiaries have
reserved capacity in the upstream transportation systems, contracting with them shall be given
precedence,” (3) “urge” CRE “to carry out the necessary actions so that the licensees of the
activities under its supervision adjust to the energy policy criteria established [in the June 2022
letter],” (4) require CRE to “modify ex officio” the terms and conditions for CENAGAS “in
order to reflect the public policy criteria established by means of [the June 2022 letter],” and (5)
establish that CENAGAS “shall apply” the actions referred to in the official letter for “provision
of a new service or any request to grant or add new routes to existing contracts.” This measure is
reflected in legal instruments that include the following, operating separately or collectively:

(a) Secretary of Energy, Official Letter No. SENER.100/195/2022 - Natural Gas

Transportation and Storage System Strategy, Secretariat of Energy (June 13,
2022), 9 and any implementing regulations;

(b) National Natural Gas Control Center (CENAGAS), Official Letter No.
CENAGAS-DG/0014/2022 (March 22, 2022);

8
Diario Oficial de la Federación, ACUERDO de la Comisión Reguladora de Energía que modifica la Norma Oficial
Mexicana NOM-016-CRE-2016, Especificaciones de calidad de los petrolíferos, con fundamento en el artículo 51
de la Ley Federal sobre Metrología y Normalización (June 26, 2017),
http://dof.gob.mx/nota_detalle.php?codigo=5488031&fecha=26/06/2017#gsc.tab=0.
9
Oficina de la C. Secretaria de Energía, Oficio No. SENER.100/195/2022 (June 13, 2022), https://boletin-
gestor.cenagas.gob.mx/gestioncomercial/tcps/SENER.100-195-2022.pdf.

4
 (c) Energy Regulatory Commission (CRE), Terms and Conditions for the Provision
of Services of the Independent Management Permit of the Integrated National
Natural Gas Transportation and Storage System number G/21317/GES/2018, 10
and any modifications.

13. This measure appears to be inconsistent with Article 2.3 of the USMCA because it
provides treatment to imported products that is less favorable than that accorded to like products
of national origin in respect of all laws, regulations and requirements affecting their internal sale,
offering for sale, purchase, transportation, distribution or use, for example, by incentivizing or
requiring users of Mexico’s natural gas transportation service to source natural gas from CFE or
Pemex. This measure also appears to be inconsistent with Article 2.11 of the USMCA because it
is a prohibition or restriction on the importation of a good of the United States destined for
Mexico, for example, by requiring users of Mexico’s natural gas transportation service to
contract with CFE or its subsidiaries to utilize their reserved natural gas transportation capacity.

10
Título de permiso, De Gestión Independiente Del Sistema Nacional Del Sistema Nacional De Transporte Y
Almacenamiento Nacional Intergrado de Gas Natural, G/21317/GES/2018, Otorgado Al Centro Nacional De
Control Del Gas Natural (June 28, 2018), http://boletin-
gestor.cenagas.gob.mx/gestioncomercial/regulacion/titulo/G_21317_GES_2018%20Permido%20Definitivo.pdf.